HOA Election

We have a medium-sized, mandatory HOA. The significant assets are several common areas, and the usual functions of the volunteer Board are to monitor and pay for mowing and watering these common areas, enforce ACC provisions, and conduct several community events each year. Normally, there is some difficulty finding enough volunteers to step up and run for open Board positions and perform these chores.

This past year has seen a major dispute between the HOA and a member, regarding their construction of a retaining wall on a small HOA property, over which the owner(s) of that lot has an easement. The dispute concerns the rights of the lot owner under the easement: the HOA says the easment specifies a right of passage/traversal, and the homeowner says it is an exclusive use easement conveying all rights except ownership.

This has become a very contentious and expensive dispute. It has led to many resignations and appointments of replacements. At the time of the Annual Meeting and elections, only three of seven Directors had been elected by the Membership, and the other five were selected at various times to replace Directors who resigned. Also, it has caused the Board to hold periodic closed "executive" meetings, which has not been practiced in prior years.

This year, there were an unprecendent eleven (11) nominees for the four open positions on the Board. The Nominating Committee took the unprecedented step of limiting the ballot to four candidates. They did this without any notice or information, leaving the clear impression that the four candidates on the ballot were the only four nominees available (as has often been the case). These four happened to be the three incumbents whose terms were ending and one neighbor who lived directly between (adjacent to) two Directors. The three incumbents had all been selected by the Board during the past year. It is also true that the four candidates selected were committed to this lawsuit, and this minimized the number of new faces with access to information about the lawsuit and the executive sessions.

Excluded were the homeowner being sued and another homeowner in his employ; also excluded were nominees with no affiliation to either side, who voiced concern about the wisdom and lack of caution show in pursuing this lawsuit. One of these nominees collected his fifty proxies on his own and filed these at the annual meeting for the election. The Board simply refused to count these. Another nominee attempted to discuss the validity of the Board's proxies and actions, and was told by the Board this was out of order. He further moved to vote whether the Board's proxies should be accepted, but no vote was permitted.

Our Bylaws provide that the Nominating Committee may chose from available nominees. Never before, in our HOA's two-decades, has this involved culling the nominees, but it is a valid interpretation of our Bylaws. Our Bylaws also specify that the Nominating Committee must be appointed in advance of the previous annual meeting (a year in advance). This clearly protects the HOA from selection based on recent politics and issues, approaching the time of the election. Our Bylaws also specify that the Nominating Committee chair must be a member of the Board of Directors. Neither of these two provisions were followed, and (like the provision invoked to allow culling) neither were ever followed in prior years, as far as anyone can recall.

Nominations were taken from the floor of the Annual Meeting and attendees voted. The Board's selected nominees won, based on votes from the floor plus the Board's proxies, with no other proxies counted. (In prior years, voting was usually done from the floor only, and proxies were held to ensure a quorum of Members, if necessary.)

My opinion is that this is undemocratic. The excuse given was that this is how things are done in other organizations. What kind of organizations was not said. I'm sure it is done (and is appropriate) in national non-profits and perhaps also in sports federations and maybe PTAs. Is it actually common in mandatory HOAs?

In my opinion, if the Membership lets the rules slide for convenience, and no one appears to be disenfranchised and no one objects, then the Membership can do as they please. In my opinion, consistent prior practice in itself forms a rule, and divergence from this requires clear notice, if it is acceptable at all. In my opinion, if a current Board or one side of a dispute (and our Directors constitute both) invokes a rule in order to stack the deck, especially if done in conflict with consistent practice and democratic values, then they are accountable for following all the rules. The Membership can choose to object to such conduct and repudiate the results. And when the Board of Directors is obligated to hold a Membership meeting, they cannot prohibit the Members from discussing and voting on matters that do not suit their goals.

What are your opinions, please?

Thanks in advance for comments and suggestions.

Thanks, TracieS.

Yes, our HOA is incorporated as a non-profit in TX, so it does fall under the TX Non-Profit Corp Act. I don't know about open meeting laws, but I will check. Good question.

I did list the relevant rules from our Bylaws, which say that culling nominees by the Nominating Committee is acceptable, but the Nominating Committee itself was not formed in an acceptable manner, according to the Bylaws.

As I said, elections have always been done without a proper Nominating Committee, but also without any culling by the Nominating Committee. What I mean by the Membership doing as it pleases -- as a practical political matter, if we all break the rules in the same way every year, and it appears fair and nobody objects, then we have done as we please. Does this create an practical problems, of which we may be unaware? I believe this leaves us open to objections and complaints, which does not matter if no one develops any interest in objecting or complaining.

My contention is that if a rule is applied in an unfair manner, then people are likely to object. So if other rules are broken -- even innocuously -- then the Board that breaks some accepted practices and breaks other rules innocuously and according to tradition, is subject to repudiation for breaking the rules that no one cares about, because they also acted unfairly and broke with tradition, even if the unfair part was according to the rules.

I agree that the bigger question is the unbudgeted expenditure, which they now claim was a surprise to them. So, now they have to collect additional funds in order to pay regular, budgeted expenses for the rest of the year.

The Directors insist that this lawsuit is necessary to protect our rights. They seem convinced this is their fiduciary responsibilty and they "have no choice" but to pursue it. Our Declarations of CE&Rs (Covenants, Easements and REstrictions) state that any enforcement is discretionary for the Board, "without obligation to do so".

Well, my association is REALLY casual, and we know we incur some legal liability because of it.

Our docs also call for a Nominating Committee to nominate people to open seats. Our docs don't say anything about the NomComm culling the herd. My association doesn't use a NomComm, even though our docs require it. Could this open us up to legal issues - YES! We are fully aware of this. We don't have people to staff a NomComm though.

My docs also call for secret ballots for all elections, and we've never used those. We WOULD use secret ballots for any type of contested election though. We also USE the proxies. Proxies are to be used, not just to try to get a quorum.

Are you a big association? Mine has 19 units, townhome style, with 12 total owners. Try to fill a board and a nomcomm with 12 owners, only 4-5 of whom care or show up for meetings.

I'm actually horrified at the actions of your BOD. I expected lots of responses to this post right off the bat, but you bring up a lot of issues. Responses should be coming soon, and by people MUCH more knowledgeable than me.

Do your CERs mention elections/board/officers? My Bylaws mention lots about elections, but my bylaws are trumped by my Articles of Incorporation. What do your Articles of Incorporation say about elections (IF your bylaws are trumped by your Articles). What do your CERs say about elections/officers/bod? Anything? My CCRs trump both Articles and Bylaws. All are really in agreement, but if there's questions, my CCRs are the top of the heap (for us...of course local/state/federal statutes/laws top those - USUALLY).

Make sure you've got the right part of your documents, and that you have the most current copies.

Do you have a management company? Sometimes the management company (I know I'm going to get burned for this one) can reign in a wayward BOD. I'm assuming you don't have one, because no one has advised your BOD against these ridiculous actions.

Yikes...I'm going to think about this one some more. I'm also really interested in responses because we're such a casual association ourselves.

You didn't mention what your insurance company says. Who is paying the legal fees to represent your BOD? I do understand these are separate issues (lawsuit = easement issue...). Aren't these other issues coming to the forefront under close scrutiny by multiple lawyers? The money is one thing, but WOW...what a BOD!

What exactly do the bylaws say is the Nominating committee's task?

You are insinuating that they overstepped their boundaries.

Most NC find willing and capable nominees to fill the positions, and that group is presented to the membership, HOWEVER the slate is not exclusive or limited. All others can be nominated at the meeting or written in.

People who want to be on the board can campaign.

MicheleK,
Sounds to me like you are trying to build your house on shifting sands.

IMHO your election was held illegally. To me that stops the process at the time of the election. Your HOA can not be made whole at some date in the future. It has to be at the date the election was held.
I can not reason how any HOA can restrict in any fashion the number of people that want to run for the Board. It makes no legal sense that the process demands you create a slate of nominees and at some point add a caveat that these numbers are restricted. The prior board (IMO) have damaged all the people that desire to run. How else can this not be so. The Board or your documents set no restrictions on candidates because there should be none set. I would think this action by the Board is in violation of your covenants, in violation of state law and the same for federal under the constitution.

If I am right, nothing after the election means anything. There is cause to determine if this election is legal. That is where the effort should be made. Determine that and then see where you are.

It should not be that hard to do. Look into petitioning a Judge to take a look at the circumstances.

First, object to the election at a Board meeting, get a second and in discussion establish your objections. Stick to the legality of the election. Record the meeting. If the board denies, request it be made a part of the minutes, don't segue, just leave.

Get a few friends together and hire a lawyer to write to the Board for an explanation. All evidence you could need. If you are serious go to court, but let them know that are forcing you and don't hide anything, keep it all open, and for God's sake, don't start calling names. Keep it written or recorded and keep accurate records.

Then again I find this posting very confusing and much more seems to be at issue when the election has to be vetted before anything can be moved forward.

Yes, Nominating Committees are common elements of organizations. (I think that responds to RobertR1's issues; if not, please specify which post is confusing and why.) However, that does not relieve a Nominating Committee from being constituted properly, according to an organization's Bylaws or following accepted practice of that organization.

"Cull" means they reduced the number of candidates from the total number of nominees. That is what occurred, the event that we are discussing, and the term used by the Nominating Committee Chairman. It is not anybody's opinion.

The Membership can vote for anyone, but not effectively unless they know who is available. If one political party (say, the one you don't like) ran your state elections and only put their candidates on the ballots, then you and anyone else could also vote for someone from the other party (the one you do like), but the one controlling the ballots would also have 100% of seats in your legislature. Not just a huge majority, but 100%. That's what we have in my HOA. If you like, I could use a corporate analogy instead of a civil election, but the principal is the same. No competition is allowed, only people with one viewpoint are represented, and the corporation/state/endeavor will be corrupt, increasingly incompetent and will fail. But everyone will be harmed, not just the one's who control everything and blame all the problems on someone or something else.

Anyway, I will answer your question and ask you to answer mine:

The Directors said they would not count the other proxies, because they could not validate them. They refused to say what they would have to do to validate them. They refused to say how they validated their own proxies. They did say that if they counted the proxies, only 30 of the 50+ would have been valid. They refused to say how they determined this, or how they could determine which "would be" valid without validating them.

You did not say how the Nominating Committee can perform any duties or claim any powers, if not properly constituted according to the organization's Bylaws.

The Directors selected the nominating committee, which selected the Directors. They all ignored our rules, so my beef is with all of them. They are spending over $100,000 of our money without our permission, without budgeting or telling us for months, and without first obtaining these funds. They are doing this in order to sue one of us on the pretext that they are defending our rules. In doing so, they apply rules they choose when it suits them and in ways that suit them, and they freely ignore rules when that suits their purpose.

I believe that everything I said is true and consistent, and therefore makes sense. I'm not sure how much of that you read carefully.

I believe FIND would be a more constructive duty for the Nominating Committee -- FIND more nominees if there are not enough or if they feel better ones can be found and added to the slate. It is my opinion that "qualifying" the nominees is not a proper power of a Nominating Committee in our organization -- that should be done by the Membership in an election. But it doesn't matter what you or I think their duties should be or are "supposed to" be. I stated what they did and what our Bylaws say.

Our Bylaws empower the Nominating Committee to select any number of nominees "as it shall in its discretion determine, but not less than the number of vacancies that are to be filled. This is how candidates are placed on the Board's proxy ballots that are distributed to the Membership and returned by mail prior to the Annual Meeting. I did not say that the Nominating Committee placed all available nominees on this ballot -- I said they place the four they selected for the four vacancies, out of the eleven available (who volunteered), so those four are all that most homeowners (those who did not attend the Annual Meeting) saw on the ballot. I said they did this without information, so most homeowners did not even know there were available volunteers whose names were not even presented on this proxy ballot.

Our Bylaws say what I told you they say. Where are you getting these general rules and suppositions, please? You have presented no basis for any of them nor related them to the actual situation I described.

I think you are discussing something else, and I really think that is off-topic. I would like to hear suggestions and comments about the situation that I presented here.

I or SusanW1 have failed to convince you the election is valid? I am not trying to convince you the election is valid. I believe the Board and the Nominating Committee both acted in bad faith and against the interests of the HOA. I believe the excuses they gave for their actions are inconsistent and irrational. I also believe they acted contrary to the Bylaws, as I have stated.

The only thing I said in their favor is that the Bylaws technically permit the Nominating Committee to qualify nominees as candidates and cull them, if the other provisions of the Bylaws are followed. I presented all those Bylaw provisions.

I do not think this is a good thing; as I said, the Nominating Committee's duties should be set as encouraging nominations and determining eligibility, not qualification. Eligibility is determined by Membership, as you suggested. All nominees should be placed onthe ballot as candidates, and their qualification should be determined by the Members by way of election. That's what I think the Bylaws should say, as an improvement on the current (and common) situation.

As to our situation, as a practical matter, how can any homeowner vote for a homeowner who is not on the slate, if there is no way for them to know that homeowner has volunteered to be on the Board?

How do I argue for production of executed and counted ballots and proxies as per my records request, against the Board's use of "secret ballot"?

If the Board or Nominating Committee acted illegally, what practical steps can disenfranchised homeowners take?

In many large or medium-sized HOAs, most of the membership is apathetic toward the HOA. That may change after they get the bill for a special assessment, but most can barely be troubled to sign a proxy and mail it.

That's pretty much the conclusion, to which I had come. Remove the bastards.

Clarification on a few points. As I have said, we have a volunteer Board of seven Directors. They run the show. We have no management company. Our process was not gradually broken. It was fine until this year, when they decided they needed to usurp the process to avoid the election interfering with their lawsuit. Slowly fixing things is not really an option. I think if this lawsuit goes another month or two, then the Defendant homeowner will counter-sue and the cost of extricating ourselves will be so high that no one will be willing any more to take over and clean up. Speaking for myself, at that point I think I will prefer to let them go all the way and let people see for themselves how bad it can get.

This is going to be one of those cautionary tails you read about in the news, like Enron or the rocks of the Financial/Insurance industries. Except this time many people will cheer. You've read about HOA's taking people to Court and minor fines blowing up into ruinous $30,000 judgements? How about HOA sues homeowner/lawyer and get stuck with $3M costs and judgement. Divide that by 250.

This Board has been telling the homeowners that we are winning and we will just lose our investment if we stop. They have read rulings and letters from the Court and claimed huge victories from things that look like they clearly give nothing. They told us for a year that this would cost/was costing us $15,000 to $30,000. Then they suddenly "discovered" it had cost $90,000 (still lowballing, I believe) and we will need an assessment. ("Sorry we did not keep track, but we never in our wildest dreams imagined a fellow homeowner would do this to us.") They are out of touch with reality and/or lying through their teeth. Whenever they are done, they will lie about everything and blame whoever takes over. Many homeowners simply believe whatever they are told. Our lawyer *must* be right. It's the *legal process*, so we must wait and see. They wouldn't do anything I say they are doing, because that would be *illegal*.

If they were replaced, now, then I would be held at fault for $90,000. If it's more, then I would be held at fault by my neighbors for that. The Board would not be held responsible for lying again about the amount. The guy they are suing, of course, would also still be blamed, but that's his problem. If this gets to be much more expensive, then I will no longer be willing to step in and deliver the bad news. Let the stupid sheep find out the hard way. That's why I'm asking what will happen to the debt when no one wants to have anything to do with an HOA any more.

Michael,

I know nothing about Texas law but here in Florida members are entitled to see all official documents (with the exception of ongoing legal cases). In fact, this past Friday a neighbor and I went to the management company offices after emailing them what records we wanted to see. We had no problem and if they had refused they could be charged (I think $50 per day) if they were given ten days notice and didn't comply. The word going around was that members were not entitled to see all records and many owners believed it...not true. Check out Texas statutes to see if the may be the same.